7 ways small-business owners can save on taxes in 2022

• Published date: 11 February 2022
• Publication title: The China Post

Taxes are complex, and for small-business owners, freelancers and people with side gigs, they're even more complex - especially now, as filers reckon with the tax effects of small-business relief programs and rule changes.

But those new twists and turns can create some tax-saving opportunities, according to three tax pros. Here are seven things they say entrepreneurs and independent workers can do to lower their tax bills and their anxiety this filing season and in the year ahead.

1. DON'T SWEAT THAT PPP MONEY

If your business received a loan through the Paycheck Protection Program, or PPP, and you qualified for forgiveness, the IRS generally doesn't consider the money part of your gross income. In addition, on your federal tax return, it's usually OK to deduct the business expenses that you paid with the loan money.

'The IRS has been clear,' says Meredith Tucker, who leads the Entrepreneurial Services Group at accounting firm Kaufman Rossin in Fort Lauderdale, Florida.

State-level tax rules may have a different stance on PPP taxability, however, so be sure to consult with a qualified tax pro.

2. EAT UP

For 2021 and 2022, the business meals deduction is up from 50% to 100% if the food and beverages are from a restaurant .'That can include takeout and delivery. It doesn't have to be eaten on the premises,' says Mark Luscombe, who is a federal tax analyst for Wolters Kluwer Tax and Accounting.

But make sure you're getting your business meals from a restaurant. 'You can't get a deli tray from a grocery store and have it qualify,' he adds.

3. WATCH THAT ODOMETER

If you're self-employed, you can get a tax deduction for every mile you drive for business purposes. In 2021, the rate was 56 cents per mile, and in 2022, the rate rose to 58.5 cents per mile. That means a 20-mile trip to meet a client might score a deduction of about $12 this tax year.

But don't guess here; the IRS may ask you to substantiate your mileage. 'The important thing, especially if you don't have an exclusive vehicle used just for businesses, is to keep a log,' Luscombe says.

4. CAPITALIZE ON SPECIAL RETIREMENT OPTIONS

There are special tax breaks for retirement savings if you work for yourself. Solo 401(k)s, also called one-participant 401(k)s , are one example of IRS-blessed retirement accounts designed for self-employed people. They mimic many of the features of an employer-sponsored 401(k), including being able to sock money away pretax.

SEP IRAs are another option, and you have more time to...